Company research report

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I. Boston Beer Company Overview

The Boston Beer Company (NYSE: SAM) operates in the high-end alcoholic beverage industry

and is one of the largest craft brewers in the United States. Its portfolio includes several brand

leaders such as Truly Hard Seltzer, Samuel Adams and Angry Orchard Hard Ciders. It has also

seen great success with its hard iced tea line, Twisted Teas, which has become the best-selling

hard tea brand in the nation. The company is currently experiencing mixed growth within its

product categories, with hard seltzer and alcoholic teas leading growth and beer and hard ciders

experiencing slight declines.

The hard seltzer market size is approximately $3.8bn, with 58% of the off-premise market share

belonging to White Claw and 26% belonging to Truly1. Meanwhile, Twisted Tea dominates the

hard tea category with over 90% market share. Strong performance by both brands is due to

beverage trends shifting towards more low-calorie, gluten-free and health-conscious choices.

The craft beer market experienced a significant downturn due to the pandemic, adding to the

declining presence of Boston Beer Company’s beer brands for the last two years. Its brands only

account for 1% of the U.S. beer market1. It is a highly fragmented industry that is highly

competitive with low barriers to entry. Thus, beer companies have shifted towards producing more

flavors to differentiate their product lines and to satisfy increasing preferences in flavored beers.

This trend suggests new opportunities for SAM as a high-end beer producer.

With the hard seltzer market expected to grow to $30bn by 20301 and as optimism increases in the

craft beer sector as we slowly return back to normalcy, we anticipate a lot of growth and

opportunity ahead for the company.

1 Seeking Alpha

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II. Profitability Analysis Revenue

SAM is a growth story within a mature industry. After experiencing declining revenue growth in

2016 (-5.6%) and 2017 (-4.8%), SAM rebounded strongly in the following years with year-over-

year growth rates of 15.4%, 25.5% and 38.9% in 2018, 2019 and 2020 respectively. The torrid

top-line growth was primarily driven by its Truly hard-seltzer segment and the integration of its

craft beer brand, Dogfish Head Brewery, which was acquired in March 2019. As of the fiscal year

2020, its Truly hard-seltzer segment accounts for approximately 48% of its revenue and owns 26%

share of the fast-growing U.S. hard-seltzer market2. However, it is unlikely that the company can

sustain its strong pace of growth for several reasons. New entrants in the hard-seltzer space and

fickle customer loyalty to brands intensify competition in the lucrative market. Its flagship brands

Samuel Adams and Angry Orchard, also face headwinds in their respective categories, driven by

a consumer shift towards lower consumption of traditional beer and craft beer3.

1Goldman Sachs Equity Research Report 2IBISWorld 3IBISWorld

863 996

1,250

1,736

FY2017A FY2018A FY2019A FY2020A

Revenue (US $ MM)

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Margins

In addition to having strong year-over-year revenue growth, SAM has maintained stable operating

margins, between 16% and 20%, for the past four fiscal years. Gross margins have trended

downwards recently, in part driven by SAM’s explosive growth in seltzer and a constraint in

manufacturing capacity. However, while management has gradually added capacity, the increases

have not been sufficient to meet demand. The higher costs were attributed to increased reliance on

production at third-party breweries. The recent uptick in operating margin was attributed to a

temporary decrease in SG&A costs, according to management, as the pandemic reduced

advertising spend. Promotional spending on brands is expected to pick up in the second half of

2021, which will pressure operating margin4.

4 Morningstar Research

Angry Orchard 11%

Samuel Adams 11%

Twisted Tea 26%

Truly Hard Seltzer

49%

Other 3%

Revenue breakdown by segment

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Returns Analysis

SAM’s ROA has remained relatively stable, around 15 – 16%, other than in 2019 when it

significantly increased its asset base through the Dogfish acquisition. At the same time, its ROE

has stayed fairly consistent, which can be explained by the fact that it has little debt. However, its

earnings per share has increased much more quickly. Over the past three years, this change

corresponds to the increase in APIC, suggesting that it is primarily driven by reinvestment of

earnings back into the company.

52.1% 51.4% 49.1%

47.4%

FY2017A FY2018A FY2019A FY2020A

Gross Margin

19.6% 16.9% 16.8%

18.6%

FY2017A FY2018A FY2019A FY2020A

EBITDA Margin

11.5% 9.3% 8.8%

11.1%

FY2017A FY2018A FY2019A FY2020A

Net Margin

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Return on Assets FY2017A FY2018A FY2019A FY2020A Net Income 99.0 92.7 110.0 192.0 Interest Expense x (1 - 21%) 0.0 0.0 0.0 -0.1 Sum 99.0 92.7 110.0 191.9 Total Average Assets 592.8 604.7 847.0 1,216.4 ROA 16.7% 15.3% 13.0% 15.8%

Return on Equity FY2017A FY2018A FY2019A FY2020A Total Average SE 435.1 441.9 598.0 846.3 ROE 22.8% 21.0% 18.4% 22.7%

Earnings Per Share all others in USD MM FY2017A FY2018A FY2019A FY2020A Net Income 99.0 92.7 110.0 192.0 Weighted Average Shares Outstanding 12.2 11.7 11.9 12.3 Diluted Earnings Per Share (reported) 8.1 7.8 9.2 15.5 Additional Paid-In Capital 372.6 405.7 571.8 599.7 Change in Diluted Earnings Per Share -3% 17% 70% Change in APIC 9% 41% 5%

Peer Comparison

In terms of revenue growth, SAM has far outpaced its peers in the past two fiscal years, with a

CAGR of 32.1%. For context, our peer set is relatively diversified, including both domestic and

international wine and spirits makers. SAM’s revenue concentration in the hard-seltzer segment

not only buffeted declining or flat sales during the pandemic, as experienced by other global

competitors, but was rather integral to the company’s growth. SAM’s margins trail those of its

peers, primarily because of its unique product segment. Unlike most of its peers, which include

much larger players in the mature beer and alcoholic beverages industries, SAM’s revenue is

mainly driven by a hyper-growth hard-seltzer niche segment and its traditional but declining craft

and hard cider products. Hence, SAM’s margins are lower due to heavier SG&A spending as a

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proportion of revenue, which includes brand promotion and non-recurring integration costs.

III. Cash Flow Analysis

Overall, SAM has a very healthy balance sheet with strong liquidity and little leverage. With

regards to its cash flow profile, SAM’s operating cash index over the past few years has trended

downwards, but has hovered around 1, suggesting that its earnings are largely backed by cash and

supplemented by non-cash items, such as depreciation.

Cash Flow Profile in USD millions FY2017A FY2018A FY2019A FY2020A Net Income 99.0 92.7 110.0 192.0 Cash Flow from Operations 136.0 163.4 178.2 253.4 Cash Flow from Investing -32.9 -55.3 -258.8 -139.1 Cash Flow from Financing -128.5 -65.3 8.9 12.3 Net Change in Cash -25.4 42.8 -71.7 126.6

32.1%

3.0% 2.2% (1.6%) (1.7%) (2.1%) (3.2%) (5.3%) (6.0%) (6.4%)

The Boston Beer Company, Inc.

Constellation Brands, Inc.

Tsingtao Brewery Company Limited

Pernod Ricard SA Diageo plc Kirin Holdings Company, Limited

Carlsberg A/S Molson Coors Beverage Company

Anheuser-Busch InBev SA/NV

Heineken N.V.

Revenue CAGR (FY2018 - 2020) Peer Comparison

0.90 1.20 1.11 0.98

FY2017A FY2018A FY2019A FY2020A

Operating Cash Index (Operating Cash Flow - Depreciation) / Net Income

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Working Capital Management

SAM’s high earnings quality corresponds to the health of its liquidity. Inventory has increased at

a steady rate. SAM’s payables have also gone up as its accounts receivables have shrunk over the

same time frame, suggesting that the company has been improving its cash conversion cycle. This

is in line with the trend of increasing cash flow from operations, which indicates that SAM, a

mature firm, is able to effectively fund its current liabilities with current assets.

Capital Expenditure & Financing

Capex has largely outpaced depreciation in recent years as the company invested in its breweries,

increasing manufacturing capacity, driving efficiencies and cost reductions and supporting

innovation. Other than its $330 MM acquisition of Dogfish Head Brewery in 2019, its recent

investments have been organic. While SAM is an established player in a mature industry, the trend

of rising capex is reasonable because the company has been investing in manufacturing capacity

for key growth segments, the Truly hard-seltzer and cider divisions.

From a financing perspective, SAM has been able to largely maintain a cash inflow due to cash

flow from operations. SAM had no debt before 2019, and with the $72 million of debt on its

balance sheet currently, the firm has a high-interest coverage ratio given its robust operating cash

3 -2 -12 -24

-2 -21 -25 -25 0 6

21 41

FY2017A FY2018A FY2019A FY2020A

Changes in Working Capital (in USD millions)

Change in Acc. Receivable Change In Inventories Change in Acc. Payable

51 52 56 66 33

56 93

140

FY2017A FY2018A FY2019A FY2020A

Depreciation vs. Capex (in USD millions)

Depreciation Capex

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flows. The company also capitalized on a rich stock price, which has increased by roughly 200%

since December 2019 and issued $15 million and $19 million of stock in the past two years.

IV. Pro-forma Financial Statements

Our projected profitability and cash flow analysis is reflected in our pro-forma financial statements

below:

Income Statement Projections ($mm)

Sales Growth Assumptions

We agree with management’s optimistic projections of 26.2% and 14.6% sales growth in 2022 and

2023, respectively, as the economy reopens and the alcohol and leisure sectors experience high-

volume demand. Further, SAM’s Truly brand has proven a significant leader in the hard seltzer

market, which is forecasted to grow from $4bn in 2020 to $30bn by 2030.5 However, despite the

pandemic-related market expansion, we predict the firm’s revenue growth to slow in 2023 as the

market stabilizes post-pandemic and early brand innovators such as Truly and White Claw lose

their first-mover advantage in the hard seltzer market. We expect the firm to reach a long-term

growth rate of 2% by 2029 as the seltzer market matches the growth rates of the more mature beer

and cider industries.

5 Goldman Sachs Equity Research Report

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Growth Timeline Assumptions 2021 2022 2023 2024 2025 2026 2027 2028 2029

Sales growth 43.1% 26.2% 14.6% 10.0% 7.5% 5.0% 4.0% 3.0% 2.0% GAAP Earnings Growth 54.1% 46.3% 29.5% (2.4%) 7.6% 5.1% 4.1% 3.1% 2.2%

Cash Earnings Growth 44.9% 46.3% 29.5% (2.4%) 7.6% 5.1% 4.1% 3.1% 2.2%

Margin Assumptions

Further, we assumed a gross margin of 48.3% from 2022, growing 1.4% due to expected

economies of scale realized in the near-term growth cycle.

Margin Timeline Assumptions 2021 2022 2023 2024 2025 2026 2027 2028 2029

Gross margin 46.9% 48.3% 48.3% 48.3% 48.3% 48.3% 48.3% 48.3% 48.3%

EBITDA margin 20.8% 21.2% 23.5% 21.2% 21.2% 21.2% 21.2% 21.2% 21.2% EBIT margin 15.2% 17.6% 19.9% 17.6% 17.6% 17.6% 17.6% 17.6% 17.6%

Balance Sheet Projections ($mm)

Boston Beer Company currently has a healthy balance sheet with excess cash reserves growing

from $163mm reported in 2020 to a forecasted $3.56bn in 2030 without major transactions

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occurring in the following 10-year period. These gains are driven primarily by expected seltzer

sales growth in post-pandemic reopening. Additionally, we forecast significant gross PP&E

investments, growing from $689mm in last fiscal year to $4.55bn in 2030 as the firm modernizes

and scales its factory assets to meet rising demand.

CapEx and Depreciation Timeline Assumptions

2021 2022 2023 2024 2025 2026 2027 2028 2029

CapEx/Sales 9.0% 8.5% 8.8% 8.6% 8.7% 8.7% 8.7% 8.7% 8.7% Depreciation/Sales 5.6% 3.6% 3.6% 3.6% 3.6% 3.6% 3.6% 3.6% 3.6%

Cash Flow Statement Projections ($mm)

IV. DCF Valuation

Using the projected financial statements described above, we built a DCF model that calculates

Boston Beer Company’s unlevered free cash flow for years 2021 - 2030. When discounting the

free cash flows, we assumed a 6% discount rate.

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For terminal value we used the perpetuity growth method using a 2% growth rate, after which we

discounted the terminal value using a 6% discount rate. Upon summing up the present values of

free cash flows and the present value of the terminal value, we found an enterprise value of

$12,483. By subtracting net debt of -$163, we found an equity value of $12,647, which resulted in

$1,014.52 equity value per share. Given that we made assumptions for the WACC and perpetuity

growth rate, we also conducted a sensitivity analysis to see the effect of our assumptions on the

enterprise value, equity value and equity value per share.

We also used the EBITDA multiple method to find terminal value, by assuming a 22.5x exit

multiple, based on our analysis of comparable companies. The projected EBITDA for 2030 is

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$1,054 and with a 22.5x multiple, the terminal value is $23,722 and $13,246 on a present value

basis. Summing up the present value of cash flows and the terminal value, we obtain an enterprise

value of $15,915, which results in $1,289.81 equity value per share. Similar to the perpetuity

growth method, we conducted a sensitivity analysis on enterprise value, equity value and equity

value per share.

V. Earnings-based Valuation

The Boston Beer Company, Inc. Earnings Based Valuation

PARAMETERS FY1 FY2 Ltg EPS Forecasts 24.55 33.34 37.58% (using the mean analyst forecast) Book value/share (last fye) 84.86 38.0% Discount Rate 6.00% Dividend Payout Ratio 0.000 Next Fsc Year end 2021 Current Fsc Mth (1 to 12) 5 Target ROE (industry avg.) 0.1500

Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Long-term EPS Growth Rate (Ltg) 38.0% 38.0% 38.0% 40.0% 40.0% Forecasted EPS $24.55 $33.34 $46.02 $63.52 $87.67 $122.74 $171.84 Beg. of year BV/Shr 84.86 109.41 142.75 188.77 252.29 339.96 462.70 Implied ROE 30.5% 32.2% 33.6% 34.8% 36.1% 37.1%

ROE 28.9% 30.5% 32.2% 33.6% 34.8% 36.1% 37.1% 32.7% 28.3% 23.9% 19.4% 15.0% Abnormal ROE 22.9% 24.5% 26.2% 27.6% 28.8% 30.1% 31.1% 26.7% 22.3% 17.9% 13.4% 9.0% Beg of year BV/shr 84.86 109.41 142.75 188.77 252.29 339.96 462.70 634.54 842.10 1,080.27 1,337.97 1,597.90 End of year BV/shr 109.41 142.75 188.77 252.29 339.96 462.70 634.54 842.10 1,080.27 1,337.97 1,597.90 1,837.59 Required rate (r) 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% Discount rate 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 1.898 2.012 Perpetuity 305.95 397.17 524.11 689.01 903.37 1,202.47 1,596.98 1,772.31 1,851.10 1,795.09 1,577.35 1,191.16 PV of Abnormal ROE 0.22 0.22 0.22 0.22 0.21 0.21 0.21 0.17 0.13 0.10 0.07 0.04 Incremental value each year 18.36 23.83 31.45 41.34 54.20 72.15 95.82 106.34 111.07 107.71 94.64 71.47 Cumulative Incremental value 18.36 42.19 73.63 114.97 169.18 241.33 337.14 443.48 554.55 662.25 756.89 828.36 Implied price $419.40 $537.32 $699.67 $911.07 $1,186.35 $1,566.87 $2,069.45 $2,358.17 $2,552.77 $2,605.76 $2,479.58 $2,157.00

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The EPS forecasts for SAM was $24.55 and $33.34 in 2021 and 2022 respectively.6 The EPS

growth estimate for the next 5 years is 37.58% and our current discount rate assumption is 6%.

The current ROE for the company is 26.78%, but since the company is currently in a growth stage,

it would be more suitable to use industry ROEs for our assumptions. For the industry ROE, I took

the overall average of the industry average for Breweries for the past 3 years of 11.6% and the

industry average for Distilleries and Vintners for the past 3 years of 18.4% to get 15% as the Target

ROE.7 Since Boston Beer Company is both a craft brewer and a market leader in hard seltzers and

teas, it is suitable to use both industries as a guideline. This earnings-based valuation brings us to

an implied share price range of $911.07 - $1,186.35 when looking at the company 4-5 years down

the road. With a current share price of $1,108.42, as of 5/14/2021, the company’s value in the

market is in line with our valuation.

VI. Multiples-based Valuation

We performed a multiples-based valuation through the application of the guideline public

company method. We derived market multiples from the trading prices of companies that are

engaged in a similar line of business and that are actively traded on the public market. Noted is

that it is challenging to identify pure play publicly traded companies comparable to SAM given its

high growth seltzer business unit; however, we defined the following publicly traded companies

as the closest peer group:

6 Yahoo Finance 7 Capital IQ

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When determining the appropriate multiple range, we considered SAM’s operating performance,

historical and project growth rates, and capitalization relative to the comparable companies.

We noted that SAM’s EBITDA and EBIT margins were below both the average and median of the

comparable companies, however, its net income margin (FY+1 and FY+2) was in line with the

comparable companies.

($ in millions, except per share data)

Company Name Ticker Share Price Market Cap Enterprise Value

Constellation Brands, Inc. NYSE:STZ 230.87 44,704 55,556 Molson Coors Beverage Company NYSE:TAP 58.38 12,442 20,638 Carlsberg A/S CPSE:CARL B 182.08 28,043 32,300 Anheuser-Busch InBev SA/NV ENXTBR:ABI 74.82 146,918 242,864 Heineken N.V. ENXTAM:HEIA 118.77 68,530 86,883 Tsingtao Brewery Company Limited SEHK:168 10.09 17,522 14,666 Diageo plc LSE:DGE 46.44 108,700 128,997 Pernod Ricard SA ENXTPA:RI 209.06 54,465 64,498 Kirin Holdings Company, Limited TSE:2503 19.23 16,031 22,485

Comparable Company Operating Statistics

($ in millions) LTM Margins FY+1 Margins FY+2 Margins

Company Name EBITDA EBIT Net Income EBITDA EBIT Net Income EBITDA EBIT Net Income

The Boston Beer Company, Inc. 19.0% 14.3% 11.1% 20.8% 15.2% 11.9% 21.2% 17.6% 13.8%

Constellation Brands, Inc. 43.3% 36.1% 23.2% 36.9% 33.2% 22.3% 37.5% 33.4% 23.0% Molson Coors Beverage Company 25.3% 16.5% (7.9%) 21.1% 12.9% 8.3% 21.1% 13.1% 8.7% Carlsberg A/S 23.8% 16.4% 10.3% 23.6% 16.6% 10.3% 24.0% 17.2% 10.8% Anheuser-Busch InBev SA/NV 34.5% 26.1% 4.8% 36.0% 27.0% 11.5% 37.1% 28.2% 13.0% Heineken N.V. 18.9% 9.8% (1.0%) 22.1% 14.6% 8.5% 23.7% 16.5% 10.1% Tsingtao Brewery Company Limited 12.8% 9.1% 8.8% 14.3% 11.5% 8.7% 15.0% 12.7% 9.2% Diageo plc 34.3% 30.7% 9.8% 33.7% 30.2% 21.8% 35.1% 31.5% 23.1% Pernod Ricard SA 30.3% 25.8% 3.3% 30.0% 26.2% 17.0% 30.9% 27.3% 18.3% Kirin Holdings Company, Limited 13.0% 8.9% 3.9% 13.1% 8.1% 5.5% 14.4% 9.6% 6.5%

Low 12.8% 8.9% (7.9%) 13.1% 8.1% 5.5% 14.4% 9.6% 6.5% High 43.3% 36.1% 23.2% 36.9% 33.2% 22.3% 37.5% 33.4% 23.1%

75th Percentile 34.3% 26.1% 9.8% 33.7% 27.0% 17.0% 35.1% 28.2% 18.3% Average 24.1% 17.9% 4.0% 24.2% 18.4% 11.5% 25.2% 19.5% 12.5% Median 25.3% 16.5% 4.8% 23.6% 16.6% 10.3% 24.0% 17.2% 10.8%

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In terms of both historical and projected growth rates, SAM far exceed the average and median (as

well as the high end) growth rates of the comparable companies.

The brewer and distiller industry is a highly leveraged industry. The average Total Debt to

EBITDA is 3.36x and Net Debt to EBITDA is 3.11x. SAM, as of FY 20, did not have any interest-

bearing debt on its balance sheet.

Based on the analysis of SAM relative to its comparable companies, we considered LTM, FY+1,

and FY+2 TEV / Revenue and TEV / EBITDA multiples. Ultimately, we determined that EBITDA

was the most appropriate financial metric to value SAM given it is the most common metric used

in the brewer/distiller industry. Additionally, given the significant growth expected in the seltzer

market, and SAM’s competitive position, we determined that averaging the FY+1 and FY+2

Comparable Company Growth Rates

($ in millions) 2-Year Hist. 1-Year Hist. LTM 1-Year Proj. 2-Year Proj.

Company Name Revenue EBITDA Revenue EBITDA Revenue EBITDA Revenue EBITDA Revenue EBITDA

The Boston Beer Company, Inc. 32.1% 38.3% 38.9% 53.6% 46.8% 84.4% 43.1% 56.9% 34.4% 42.0%

Constellation Brands, Inc. 3.0% (14.2%) 3.3% 322.0% 3.3% 322.0% (1.0%) (15.6%) (0.5%) (7.3%) Molson Coors Beverage Company (5.3%) (0.9%) (10.7%) (0.5%) (10.7%) (0.5%) 5.3% (4.3%) 4.0% (0.9%) Carlsberg A/S 0.2% 5.9% (2.8%) 2.7% (2.8%) 2.7% 7.7% 6.6% 7.0% 7.4% Anheuser-Busch InBev SA/NV (6.0%) (12.9%) (7.9%) (20.3%) (7.9%) (20.3%) 11.0% 14.2% 7.9% 11.1% Heineken N.V. (3.2%) (10.5%) (10.3%) (27.9%) (10.3%) (27.9%) 6.7% 25.0% 7.2% 20.2% Tsingtao Brewery Company Limited 4.9% 19.8% 15.4% 55.4% 15.4% 55.4% 9.7% 27.7% 7.7% 19.1% Diageo plc (4.8%) (6.3%) (4.6%) (11.4%) (4.6%) (11.4%) 20.0% 13.5% 12.5% 11.6% Pernod Ricard SA (3.3%) (0.8%) (6.8%) (7.5%) (6.8%) (7.5%) 10.3% 7.2% 9.1% 9.1% Kirin Holdings Company, Limited 0.9% (4.3%) 0.3% (8.3%) 0.3% (8.3%) (5.2%) (4.5%) (1.2%) 3.8%

Low (6.0%) (14.2%) (10.7%) (27.9%) (10.7%) (27.9%) (5.2%) (15.6%) (1.2%) (7.3%) High 4.9% 19.8% 15.4% 322.0% 15.4% 322.0% 20.0% 27.7% 12.5% 20.2%

75th Percentile 0.9% (0.8%) 0.3% 2.7% 0.3% 2.7% 10.3% 14.2% 7.9% 11.6% Average (1.5%) (2.7%) (2.7%) 33.8% (2.7%) 33.8% 7.2% 7.7% 6.0% 8.2% Median (3.2%) (4.3%) (4.6%) (7.5%) (4.6%) (7.5%) 7.7% 7.2% 7.2% 9.1%

Comparable Company Capitalization

($ in millions) Total Debt to: Net Debt to:

Company Name Market Cap TEV Book Equity Cash Total Debt Net Debt Book Equity Total Capital EBITDA EBITDA

The Boston Beer Company, Inc. 13,339 13,175 958 163 0 (163) NMF NMF NMF NMF

Constellation Brands, Inc. 44,704 55,556 13,929 461 10,442 9,982 0.75 0.43 2.80 2.68 Molson Coors Beverage Company 12,442 20,638 12,834 533 8,327 7,794 0.65 0.39 3.49 3.26 Carlsberg A/S 28,043 32,300 7,126 1,330 4,971 3,641 0.70 0.41 2.17 1.59 Anheuser-Busch InBev SA/NV 146,918 242,864 78,351 15,648 98,564 82,916 1.26 0.56 5.92 4.98 Heineken N.V. 68,530 86,883 17,605 4,893 22,258 17,365 1.26 0.56 4.89 3.81 Tsingtao Brewery Company Limited 17,522 14,666 3,430 3,095 124 (2,971) 0.04 0.03 0.21 NMF Diageo plc 108,700 128,997 11,438 3,887 21,417 17,530 1.87 0.65 4.00 3.28 Pernod Ricard SA 54,465 64,498 17,956 2,391 12,254 9,863 0.68 0.41 4.16 3.34 Kirin Holdings Company, Limited 16,031 22,485 10,619 1,643 6,090 4,446 0.57 0.36 2.61 1.91

Low 12,442 14,666 3,430 461 124 (2,971) 0.04 0.03 0.21 1.59 High 146,918 242,864 78,351 15,648 98,564 82,916 1.87 0.65 5.92 4.98

75th Percentile 68,530 86,883 17,605 3,887 21,417 17,365 1.26 0.56 4.16 3.46 Average 55,262 74,321 19,254 3,765 20,494 16,730 0.86 0.42 3.36 3.11 Median 44,704 55,556 12,834 2,391 10,442 9,863 0.70 0.41 3.49 3.27

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implied enterprise value indications would be most representative considering SAM’s high level

of growth expectations.

For the FY+1 EBITDA multiple, we selected 20.5x as the mid-point, notching up and down by

1.5x to form a range of indications. 20.5x EBITDA is equal to the 75th percentile EBITDA

multiples for the comparable companies. For the FY+2 EBITDA multiple, we selected 18.5x as

the mid-point, notching up and down by 1.5x. 18.5x EBITDA is equal to the 75th percentile

EBITDA multiples for the comparable companies.

Averaging the two enterprise indications ranges result in an enterprise value range of $10.6bn to

$12.3bn, with a mid-point of $11.5bn and equity value per share of $860.70 to $1,002.96, with a

mid-point of $931.83.

The Boston Beer Company, Inc. Comparable Company Analysis

($ in millions, except per share data) LTM FY+1 FY+2

Comparable Companies Revenue EBITDA Revenue EBITDA Revenue EBITDA

Constellation Brands, Inc. 6.4x 14.9x 6.5x 17.7x 6.5x 17.4x Molson Coors Beverage Company 2.2x 8.6x 2.0x 9.6x 2.0x 9.4x Carlsberg A/S 3.4x 14.1x 3.1x 13.2x 2.9x 12.2x Anheuser-Busch InBev SA/NV 5.0x 14.6x 4.7x 13.0x 4.4x 12.0x Heineken N.V. 3.6x 19.1x 3.4x 15.3x 3.1x 13.2x Tsingtao Brewery Company Limited 3.2x 24.8x 3.1x 22.0x 3.0x 19.8x Diageo plc 8.3x 24.1x 7.4x 21.9x 7.0x 20.0x Pernod Ricard SA 6.6x 21.9x 6.2x 20.5x 5.7x 18.5x Kirin Holdings Company, Limited 1.3x 9.6x 1.3x 10.1x 1.3x 8.9x

High 8.3x 24.8x 7.4x 22.0x 7.0x 20.0x 75th Percentile 6.4x 21.9x 6.2x 20.5x 5.7x 18.5x Median 3.6x 14.9x 3.4x 15.3x 3.1x 13.2x

The Boston Beer Company, Inc.

EBITDA Multiple Range Implied Enterprise Value Range LTM 330 x 21.0x 22.5x 24.0x = 6,922 7,417 7,911 FY+1 517 x 19.0x 20.5x 22.0x = 9,825 10,601 11,376 FY+2 665 x 17.0x 18.5x 20.0x = 11,307 12,304 13,302

Selected implied enterprise value range FY+1 9,825 10,601 11,376 FY+2 11,307 12,304 13,302

Average 10,566 11,452 12,339

Valuation Summary Range Implied Enterprise Value $10,566 $11,452 $12,339 Net debt ($163) ($163) ($163) Equity value $10,729 $11,616 $12,502 Equity value per share $860.70 $931.83 $1,002.96

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VII. Investment Consensus

We believe that Boston Beer Company is properly valued based on our valuations performed

below relative to its current share price of $1,108.42 as of 5/14/2021.

The current share price lies between the mid to upper ranges of our Earnings Based Valuation and

DCF Gordon Growth Valuation and in between our Relative Valuation and DCF Exit Multiple

Valuation.

We don’t believe that Boston Beer Company is an attractive investment at this time due to the

uncertainty of how increased competition will affect the hard seltzer market and whether or not

Boston Beer Company will be able to sustain its lead with its operational efficiencies falling behind

those of its peers. Truly will undoubtedly sustain the company’s growth projections as we head

Premium/(Discount) to Current Price $1,108.42 Lower Mid Upper

Earnings Based Valuation (17.8%) (5.4%) 7.0%

DCF - Gordon Growth (22.7%) (8.5%) 15.2%

DCF - Exit Multiple 7.8% 16.4% 24.9%

Comparable Companies (22.3%) (15.9%) (9.5%)

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back into normalcy. However, we believe that without innovation in product offering and back-

end efficiencies Boston Beer Company may find itself in a situation where competition is

beginning to take away significant market share. The company has also seen major growth recently

in its share price, leaving little room for error based on our current valuation analysis.